By Niveshkarlo
September 24, 2026
Market Capitalisation Defines the Category SEBI's mutual fund classification framework divides listed companies into three market-capitalisation groups. Large Cap 1st–100th Mid Cap101st–250th Small Cap251st onwards
Large-cap funds must invest at least 80% of their total assets in large-cap stocks. These funds provide exposure to companies that occupy the top 100 positions by full market capitalisation. Large-cap companies may have established businesses, but their share prices can still fall during market corrections.
Mid-cap funds must invest at least 65% of their total assets in mid-cap stocks. Mid-cap companies rank from 101st to 250th by full market capitalisation. These funds offer exposure to businesses that fall between the largest listed companies and smaller listed companies.
Smaller Companies, Different Investment Risks Small-cap funds must invest at least 65% of their total assets in small-cap stocks. Small-cap companies rank 251st onwards by full market capitalisation.
Start With Your Goal, Not the Recent Returns There is no single large-cap, mid-cap or small-cap category that is suitable for every investor. Consider the following: Investment horizon How long can you remain invested? Risk tolerance Can you handle market fluctuations without making an unplanned withdrawal? Portfolio exposure What proportion of your existing investments is already in equities?